Tiong Nam Logistics Holdings Berhad’s net profit rose 259.6 percent to RM6.4 million in the third quarter ended Dec 31, 2020 (3Q FY21) from RM1.8 million in the previous corresponding quarter (3Q FY20).
The growth was primarily driven by growth in the logistics and warehousing services segment alongside better cost management.
Group revenue rose to RM159.3 million in 3Q FY21 from RM155.9 million in 3QFY20.
The logistics and warehousing services segment contributed the majority of group revenue with a record high of RM157.1 million in 3Q FY21, rising 13.9 percent from RM137.9 million a year ago. The increase in revenue was driven by new customers, and consistent uptrend in demand for deliveries and warehousing from existing clientele.
Notably, the logistics and warehousing services segment’s profit before tax (PBT) leaped 212.3 percent to RM13.4 million in 3Q FY21 from RM4.3 million in 3Q FY20, outpacing the revenue expansion as the Group benefited from optimised warehouse utilisation, and reduced overhead expenses due to prudent spending on non-essential expenditure.
Ong Yoong Nyock, Managing Director of Tiong Nam Logistics Holdings Berhad said, “We are on track to deliver sustainable growth in our logistics and warehousing services segment, supported by our broad client base comprising established companies across diverse industries.”
“Additionally, we have consistently registered higher deliveries and warehousing services such as for food & beverage, information technology, and electrical and electronic related goods, which have benefited as business activities increase.”
“Going forward, we view vaccine logistics and distribution as a potential contributor alongside our existing services. Our extensive cold chain facilities and logistics fleet, as well as decades of experience in serving diverse industry requirements, are well suited to support the nation’s vaccination agenda.”
Tiong Nam had recently inked an agreement with Yong Tai Berhad to provide vaccine distribution logistics services, which includes transportation and warehouse storage for the latter’s upcoming COVID-19 vaccines.
The stronger logistics and warehousing services performance had helped mitigate Tiong Nam’s subdued property development segment attributed to weaker market conditions. The segment recorded RM0.6 million revenue and loss before tax (LBT) of RM2.8 million in 3Q FY21, from RM13.8 million revenue and PBT of RM1.2 million in 3Q FY20.
Tiong Nam’s hotel and dormitory segment also registered lower segment revenue of RM1.5 million and LBT of RM5.0 million in 3Q FY21, from RM4.1 million revenue and LBT of RM2.0 million a year ago, as the tourism sector remained dampened with movement and border restrictions worldwide.
For the nine months ended Dec 31, 2020 (9M FY21), group revenue stood at RM431.3 million compared to RM461.5 million a year ago (9M FY20), while group net profit attributed to shareholders amounted to RM4.6 million in 9M FY21 versus RM5.0 million in 9M FY20.
Commenting on the Group’s prospects, Ong also said, “As our logistics and warehousing services segment continues to grow, we are currently expanding our facilities to meet future needs.”
“We expect additional warehousing capacity to come on stream from the ongoing construction of a new facility in Senai, Johor, as well as upcoming ones in Pasir Gudang and Kempas in Johor, and Senoko, Singapore. The new facilities would be completed in stages until the financial year ending March 31, 2022 (FY2022) and allow us to better serve existing and future clientele.”
The warehouse expansions are part of Tiong Nam’s RM200 million capital expenditure programme until FY2022. Upon completion, the Group’s total warehousing capacity would increase 10 percent to above 6.0 million sq. ft. from 5.5 million sq. ft. capacity currently.